OPINION: VC salaries are part of wider conversation about shifting expectations from students and staff about universities’ role in society.
Vice-chancellors’ salaries are back in the political spotlight amid growing calls to impose stricter limits.
Proposed federal legislation has threatened serious consequences for universities that refuse to comply, reigniting a long-running debate over executive pay in higher education.
The Remuneration Tribunal Amendment (There For Public Service, Not Profit) Bill 2025, championed by Tasmanian Senator Jacqui Lambie, seeks to cap vice-chancellors’ salaries at $430,000 a year, or about 60 per cent below the current sector average.
Senator Lambie has criticised what she calls “obscene” executive salaries, arguing that while university leaders pocket million-dollar pay packets, students struggle with debt and staff endure ongoing financial pressures.
If passed, the Bill would amend the Tertiary Education Quality and Standards Agency Act and enforce a nationwide salary cap on vice-chancellors.
Non-compliant universities could face deregistration.
The proposal has sparked fierce debate: supporters call it a long-overdue correction while critics warn of unintended consequences.
Data underscores just how far vice-chancellors’ salaries have outpaced broader public sector earnings.
In 2023, the average vice-chancellor at an Australian public university earned $1 million, with even the lowest-paid receiving $515,000.
Senator Lambie’s Bill proposes pegging vice-chancellors’ pay to that of senior public servants and some politicians.
For comparison, Deputy Prime Minister Richard Marles earns $478,968 while Treasurer Jim Chalmers and Senate leader Penny Wong are each paid $438,081.
A Senate inquiry into university governance has intensified scrutiny of vice-chancellor pay, reinforcing concerns about excessive executive salaries at a time when students face rising tuition costs and staff endure job insecurity.
As universities continue to argue for more federal funding, critics question whether their calls for additional support can be justified when executive pay remains so high.
Despite its bold ambition, the Bill’s chances of being passed before the upcoming federal election appear slim.
Private members’ bills rarely make it to a vote and this proposal is not currently listed for Senate debate.
However, Senator Lambie is pushing for bipartisan support and dismissal of the government’s recently announced expert governance council – set up to review vice-chancellors’ salaries – as a bureaucratic cop-out.
Meanwhile, universities are bracing for the potential fallout.
Some higher-education leaders argue that capping salaries could make it harder to attract and retain top leadership.
Others insist that competitive salaries are essential to the maintenance of Australian universities’ positive global standing.
The role of a vice-chancellor extends far beyond academia.
Leading a major university involves navigating complex financial, operational and educational challenges.
Critics of a blanket salary cap warn it could weaken leadership quality, hinder recruitment and, ultimately, undermine the sector’s long-term performance.
Strong vice-chancellors, they argue, drive efficiency, secure funding and enhance their universities’ global reputations.
However, supporters of Senator Lambie’s Bill see it as a necessary step toward restoring public trust.
At a time when students face mounting debt, staff worry about employment certainty and research funding is under pressure, million-dollar executive salaries are difficult to justify.
Proponents of change argue that limiting executive pay would free up resources that could be better allocated to student services, research programs and staff wages.
The debate over vice-chancellors’ salaries is far from new, though it is taking on greater significance.
Growing concerns over financial mismanagement, staff casualisation and the commercialisation of higher education have been blamed for eroding public confidence in university leadership.
The increasing reliance on international student revenue to sustain universities has also raised questions about financial priorities, and whether leaders are focusing too much on commercial growth at the expense of academic integrity.
This disconnect has led to calls for broader reforms, with many arguing that executive pay should be tied to institutional performance and public expectations.
Some have proposed linking vice-chancellors’ salaries to student satisfaction ratings, research impact or graduate employability outcomes.
Senator Lambie’s Bill may not pass but the controversy surrounding vice-chancellors’ salaries is unlikely to fade.
Public frustration with executive pay in higher education is part of a broader sentiment that institutions are meant to serve the public but are increasingly being run like for-profit corporations.
Regardless of whether legislative action is taken, universities will need to navigate shifting expectations from students, staff and the broader community.
• Professor Gary Martin is chief executive officer of the Australian Institute of Management WA
